County lists demands in return for $35 million in loan guarantees

An artistic rendering from a bird's eye view of how the proposed Red Cedar Renaissance project could look when completed.

Image courtesy Lansing Economic Area Partnership

Developers of the long-delayed $380 million Red Cedar Renaissance project said this week that they will agree to a bundle of pointed legal, environmental and tax provisions in exchange for Ingham County taxpayer help to finance some of the massive infrastructure needed to avoid flooding at the site.

In return for $35 million in loan guarantees, Ferguson Development and its partners say they will comply with the county’s request, which includes:

-- Proof of which businesses will lease the retail space and operate the hotels that have been proposed.

-- An agreement with county officials not to appeal new tax assessments when the project is completed.

-- An independent study by the Lansing Economic Area Partnership on the economic impact of the construction and the finished project.

-- Coordination and approvals from the municipalities, public agencies and commissions with jurisdiction and oversight.

-- Written evidence of all loans and grants needed to complete the project.

Christopher Stralkowski, project manager for Red Cedar Renaissance, said there were no concerns in providing everything being sought by county officials. “Everything they’ve asked for are the things we want to provide and will provide,” he said.

Developer Joel Ferguson said that he and his partners will sign an agreement “in a heartbeat” not to appeal new tax assessments later, adding that the agreement was advantageous to the developers as well as the county.

In exchange the county would consider issuing $35 million in bonds to fund the construction of key infrastructure called plinths to raise the development above the floodplain.

Nothing has yet been finalized and negotiations between the developer and the county are continuing. Ingham County Controller/Administrator Tim Dolehanty said last week that he was unaware that the developer has yet provided any of the requested items.

“Success of the Red Cedar Development will be anchored by certain high-profile lodging and service ventures,” wrote Dolehanty in his memo. “Letters of commitment from these corporations/service providers agreeing to occupy and develop properties within established project boundaries must be secured.”

Key among them is an agreement to prevent the developers from challenging any new property tax assessments arising from the improvements the development would bring to the land.

“Payment of bond debt is contingent upon capture of taxes related to the brownfield redevelopment plan,” wrote Dolehanty. “In order to assure this revenue stream, research into legal mechanisms to prohibit challenges to assessed property value (see “dark stores”) on this development should be explored and implemented.”

Brian McGrain, a county commissioner representing the area, said the assessment agreement is key to his consideration.

“Without that, it’s a no go,” he said. In an interview Friday, Dolehanty said such information was being sought to prevent the county from being bogged down the way that Lansing Township has been. The township used its municipal bonding capacity to underwrite the development of Eastwood shopping center on Lake Lansing Road. The development has many vacancies and the township is now struggling to pay the bills.

“We don’t want that to happen in Ingham,” said Dolehanty.

For developer Ferguson, there is not a concern about having tenants in the retail space in the development. Eastwood and township officials developed under the “if you build it, they will come” model of development, he said Tuesday.

“Everything we build, we already know who will be there,” Ferguson said. “We can confirm all our numbers.”

Also, county officials have requested a study by Lansing Economic Area Partnership (LEAP) to review the feasibility of the project. It would quantify the economic impact of the construction activities, as well as the long-term economic impact for the county has a whole.

An Aug. 12 memo from Dolehanty to the county commissioners laid out in detail a range of county demands.

“Approval of a brownfield redevelopment plan by the County Brownfield Redevelopment Authority is the official action that triggers consideration of County financing,” Dolehanty wrote. “Absent this approval, there is no proposal for the County to consider.”

A brownfield grant reimburses developers for the costs associated with environmental work on properties. The money is repaid over the course of several years through a tax capture. Some of the money is also invested in the Brownfield Redevelopment Authority for use on future cleanups.

But getting to that Brownfield agreement will require developers to produce other documents, as well as demonstrate specific cooperative relationships with various county entities.

Complicating all of this, on Friday former Attorney General Mike Cox filed a federal lawsuit accusing, among others, Ferguson, Lansing Mayor Virg Bernero, LEAP president and CEO Bob Trezise and Charles Clark of Clark Construction of racketeering. The lawsuit, filed on behalf of Chris and Leo Jerome, alleges that the Red Cedar Renaissance proposal was taken from them through a coordinated effort by those officials to wrestle control through shares. When that failed, the suit claims, Ferguson — using political clout — got Bernero to withdraw the Jeromes’ original development proposal and delivered the deal to Ferguson instead.

Randy Hannan, the mayor’s chief of staff, has called the lawsuit “sour grapes,” and Ferguson, through his attorney, has also denied any wrongdoing.

McGrain called the new legal wrinkle “one more thing we would have to consider.”

However, Ingham County Board of Commissioners Chairwoman Kara Hope said the lawsuit “is not much of a factor in my decision making” on the bonding proposals. She said she is more focused on seeing the 10 items in the August Dolehanty memo.

The project was supposed to break ground in August, but it has been pushed back to at least March, Ingham County Drain Commissioner Pat Lindemann and other officials said. Lindemann is working to upgrade the Montgomery Drain, which spans the entire project with an eco-friendly pollution control plan that would create ponds and other water features throughout the area. He said he expects to unveil plans and possible costs next month. Ferguson declined to confirm Lindemann’s comment.

“We’re on a fast track, but we don’t want to give dates,” Ferguson said. He cited such variables as the weather and working out agreements with various jurisdictions.

“It’s complicated,” said McGrain of the development deal, which he expects will move forward. He also serves on the county’s economic development board and the Brownfield Redevelopment Authority.

The complications, McGrain said, are the many moving pieces related to financing the project — $380 million in private investments that include two hotels, market rate rentals and family owned units and student housing. Developers want to build all that on a former golf course in a floodplain. To do that, they need an engineered infrastructure — in essence giant cement pads — called plinths. These structures are built above the floodplain, and the development is built on top of those.

The developers and economic officials want the county to finance the building of the public infrastructure through the sale of bonds. Those bonds would be paid back by the developer over 30 years.

The idea to ask the county to issue the bonds for the public infrastructure became public in May.

“They have a better credit rating than the city of Lansing, and thus you would have, over the course of 20-plus years, $7 million to $10 million savings in interest rates,” said LEAP’s Trezise, LEAP is working to push the project through the approval process with developers. He made the comment in May to City Pulse. At the time he said LEAP and developers expected to break ground as early as August.

McGrain said the Brownfield Redevelopment Authority had a discussion Friday about the status of the project.

Referring to the development’s schedule, he said, “We saw a previous calendar several months ago, but it was delayed,” McGrain said. “We expect to see a new one at our October Brownfield Redevelopment Authority meeting.”

Meanwhile, another member of the authority said Tuesday he cannot support the bond issue as it now stands.

Thomas Morgan said he objects to the $35 million amount. If the project fails, he said, “the county is left holding the bag.”

Moreover, Morgan said, he doesn’t see enough public good coming from the project to justify the risk. “This isn’t a bond for rapid transit,” he said. “This is a bond so a developer can make a few million dollars.”

“These guys are experts at using other people’s money to make money for themselves,” he added.

Morgan said it would be “tough to say” how much the county should be willing to risk on the project, but that “$35 million over 30 years is unacceptable.”

Morgan has some political history with Ferguson regarding the Lansing Community College board.

After Morgan filed to run for trustee this November, he said a representative of Ferguson asked him to join a Ferguson-backed slate. Morgan said a goal of the slate was to defeat incumbent Alex Azima, a retired LCC physics professor, whom Morgan supports. Rather than joining the slate, Morgan dropped out of the race because, he said, it would help keep Azima on the board.

Morgan said there's no connection between the bond proposal and his dealings with Ferguson over the LCC board seat.

"I've been vocal in my skepticism about this proposal before that was even ever on my radar."

The bats are back

Returning to Red Cedar, roosting in remaining trees

Despite the clear-cutting last spring of 88 trees fronting Michigan Avenue, two protected species of bats have returned, as they have for generations, to Lansing’s Red Cedar Golf Course.

The trees were felled to prevent the Indiana brown bat, which is endangered, and the northern long-eared bat, which is a threatened species, from roosting in the trees that would be removed during the summer when ground was broken for the $380 million Red Cedar Renaissance development. Disturbing their roosting areas would have violated state and federal regulations. Construction on the project has been delayed.

Ingham County Drain Commissioner Pat Lindemann confirmed the bats’ return. “There were thousands of trees still for them to roost in,” Lindemann said. “I was down there and saw dozens and dozens of bats.”

Lindemann’s office took the trees down in preparation for his expanded Montgomery Drain project, which is tied to the Red Cedar Renaissance, He promised that when the developers are done and he has completed the Montgomery Drain project, which will create ponds and streams to capture, contain and remove surface pollution from rainwater sewers, the former golf course will be “1000 times better.”